There’s a lot going on in American watchmaking right now. In particular, a new breed of small brand has started popping up, with passionate cheap replica watches guys quitting their former day jobs to tackle horology themselves in their hometowns. But it’s not easy. I wanted to get a better sense of what actual problems are facing these new U.S. watch brands, so I spoke with Michael Wilson, founder of Niall Watches in Kansas City, to get the story right from the source.
I asked Michael to walk me through the five biggest challenges to his business (and to the community of American watchmakers at large). Here are his answers.
The rebirth of the American watchmaking industry is in it’s infancy. The United States has several watchmakers who are doing phenomenal work. While we should all be proud of our accomplishments, as an industry we need to be aware of the challenges that lie ahead. It’s true that the Swiss have set the standard for global luxury watchmaking. However, as countries like Germany have shown us, there is room for emerging brands and new watchmaking locations in an industry that is so rapidly changing.
It’s no secret that 2016 was a truly defining time for the American watchmaking industry. From a legal perspective, America plays by very different set of rules than traditional European watchmakers. Our laws dictate a “virtually all, if not all” USA-based manufacturing process (if you’re going to label your watches as such in any way). This standard is radically different than Switzerland’s “60% Swiss Made” and Germany’s “50% German Made” standards. It’s rare for me to state absolutely, but in the case of American watchmaking there is one major absolute – no American brand will reach the full 100% USA Made legal standard in the next five years. While many of us have reached full non-movement production in the United States, there are technological roadblocks and know-how gaps that will have to be addressed before anyone can authentically claim USA Made.
It’s my perspective that USA Made should not be defined by math. It should be defined by who we are and what we stand for as watchmakers within our industry. The American watchmaking industry needs to stand for quality, authenticity, and service. The ability to manufacture high quality timepieces that are both transparent in approach and genuine in heart is important. Combined with a commitment to repairing the broken business-model of watchmaking “service,” I believe this will be the foundation for what American watchmaking means going forward.
As our industry begins to grow over the next decade, it will be imperative to focus on value with regards to what we produce. Due to increasing costs from ETA and a changing economic landscape in Switzerland, the cost of Swiss Made watches are going up. In some cases dramatically. These conditions are a small contributor to why we believe Swiss watchmakers are going to dominate the $10,000+ price category. Swiss brands have been perfecting horological manufacturing for over 250 years, therefore it only makes sense the they take the five-figure throne.
As emerging American brands acquire watchmaking knowledge in a much more compressed timeline than the established brands of the past, American watchmakers have an opportunity to capture the $1,500 – $5,000 core luxury price category. Because American watchmakers are young, we all will be judged for our value and against the watches of higher and lower price categories. Comparisons will be made on things like movement choice, power reserve, materials, finishing, polishing, dial quality, leather quality, presentation and packaging, as well as brand value. It’s important that we, as a country and industry, consider this fact of where we are as American watchmakers. While we all should maintain immense respect for the Swiss watchmaking industry, it’s a reality that we are held to different standards and must play by different rules.
While we are all very excited to be accepted as watchmakers in a global industry, having a seat at that prestigious table comes with harsh realities. The reality is that America use to be a powerhouse country of watchmakers until they were completely crushed and/or bought and relocated to Switzerland. The death of our industry was not an accident. It was the result of some very wise businessmen that saw an opportunity and capitalized on it.
Many of us in the American watchmaking industry have built a strong supply chain of partners that manufacture components for our timepieces. A few of us – Niall, Weiss, RGM and Vero, for example – have brought production of key components in-house. It’s important that as our industry grows, we remain protective over those who manufacture for us, the unique processes involved, and the equipment we use in our manufacturing processes. This industry is incredibly fierce and Niall, from time to time, has experienced the weight and reach of the industry giants. Spend enough time talking with other emerging brands and you will hear story after story of European conglomerates buying out suppliers to crush a competitor, buying out the sourcing of a key material just to keep it out of the hands of anyone else. It’s something you don’t think about in the early stages – just how many times you have the opportunity to be on the receiving end of a watchmakers competitive barrel.
Nothing on the manufacturing side can be monetized if we do not build out a solid distribution channel for American timepieces. While online sales open our industry to a global market, it has challenges of it’s own. These challenges include blocked transactions due to daily spending limits, nervous customers who don’t want to buy a timepiece until they have seen it and felt it, etc. Online is an incredible distribution channel, but it’s not the key to long term sustainable growth of American luxury timepieces.
The way for American brands to grow and compete on a global scale is through classic brick-and-mortar stores. Working with key retail partners who believe in our products and are willing to invest sales growth through emerging brands is essential. It won’t be easy – but the more opportunities we provide consumers to see an American timepiece, the faster our industry grows.
The day we opened our Niall flagship retail store in Kansas City is the day our sales went through the roof and selling larger volume became a reality. But it is important that we work with retailers to maintain healthy, profitable relationships too. Retailers have been hurt by recent changes in the industry and we can expect an uphill battle to convince established retailers to invest in the growth of an emerging industry.
A rising tide lifts all boats – essentially, when an industry does well, all participants do well. In our instance, when the American watchmaking industry does well, Niall, Vero, RGM, Kobold, and Weiss also do well. When RGM does well, Niall does well. When Niall does well, Vero does well. So on and so forth. It’s natural that as our companies expand and grow, we’re going to cross lanes at some point or another. That’s expected as part of both life and business.
It’s important to remember that most luxury best cheap rolex replica watch customers own more than one watch in their lifetime. At Niall, over 90% of our customers walk in the door with two or more Swiss-made watches in their collection. American brands are not competing in a national industry against one another; we’re competing in a global industry against foreign and global brands. We all should, cautiously, be helping each other where help is needed. In the past, Vero has helped Niall calculate the mathematics for proper sizing of nitrile gaskets on our crowns, for example. RGM has helped Niall understand what’s necessary to get into movement production and take polishing in-house. Niall has helped Vortic with the direction of their company from time to time. None of us share “the magic sauce” of what we do, but we’ve always been there when a fellow American watchmaker has asked for help.
This level of alignment is what will allow American brands to stay focused on creating timepieces that find their way across the globe. It’s this concept that will allow us, as an industry, to grow and overcome the dozens of challenges that we will be faced with as we all grow and mature. In my lifetime we will all see the comeback of an American watchmaking industry. However that is the irony and burden of a watchmaker – everything requires time and results require patience.